Name: Financial Statements - Lecture 3 - Business Activities
Uploaded: 2017-06-23T13:21:37.000Z
Duration: 6 min 7 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Future simple

the classification of business activities

There are three main business activities--

In order to better understand these activities,

let's start a business and walk through them.

Let's say you want to start a business that

figure it's an excellent way to join the 250,000 people who

The first thing is to get financing for your business.

Financing activities are all about getting or repaying cash.

If you're a corporation, you can sell shares.

Financing activities are all about funding your business.

Remember that involves not just getting the funds,

but also paying them back or paying dividends.

After you raise the funds, you'll need to spend it.

the things you need in order to run your business, generally

For instance, for your app development company,

Any long-lived assets that you use to operate a business

Investing activities generally involve the use of cash,

spend to get what you need for your business to operate.

you're going to have to begin operating the business.

to earn revenue, service revenue, in this case,

and all the costs you'll incur to earn that revenue,

things like paying the salaries of your employees,

the rent for your space, and anything else.

If you're using, consuming, or incurring costs

And they're part of the operating activities

Remember to pause the video and answer first.

In your app development company, if you sold your old equipment,

if you said A, operating activities, because you sold

If you said C, financing, because it brought in cash,

Financing involves only debt or equity financing.

The correct answer is B, investing activities.

Note that in each activity, what goes into that activity

The purchase of equipment is recorded under investing.

And, therefore, the sale of equipment is also investing.

When they pay the money back, that would also

What it comes in, it comes out of, the exact same activity.

For the next four slides, classify each transaction

Remember, to do this, you have to know the definition

If you don't, your answers will not only be wrong here,

but they'll also be wrong on a test or exam when

Dividends of a 100,000 are paid to shareholders.

Dividends involve shareholders, and the sale or repurchase

and, therefore, so are the dividends payment.

Payment of 250,000 are collected from customers.

is part of the day-to-day operations of the business.

So the correct answer is operating activities, inflow.

This is an investment in future revenue generation

and, therefore, is part of investing activities, outflow.

Now, the answer to this one is either operating or financing.

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Financial Statements - Lecture 3 - Business Activities

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practice

structure

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